Your credit score is a gauge of your creditworthiness and overall financial health. Because your credit is such a crucial part of your financial identity, it’s critical to establish solid credit as soon as possible.
A good credit score might also provide you with a competitive edge when taking out loans. On the other hand, a bad credit score can make your major financial transactions more expensive.
Here’s why maintaining a good credit rating is beneficial.
Lower Interest Rates
Lower interest rates on your loans are one of the key advantages of having good credit. When you apply for a loan, a credit card, or a mortgage, your credit score determines your interest rate.
Applicants with a higher credit rating obtain the lowest rates, while those with poor credit scores often pay higher interest rates.
Improved Chances of Obtaining A Credit Loan
If you’ve ever been turned down for a loan or a credit card, you know how frustrating it can be. If you are denied funding for something you require, such as a car, mortgage, or student loan, you can land in a difficult situation.
However, having a higher credit score increases the chances of your loan being approved. Of course, your credit score isn’t the only consideration for lenders, but it is one of them.
Approval for Certain Jobs
A personal credit check is required for some jobs, such as those requiring a security clearance or dealing with money.
This is to ensure that you are financially capable and will not be subject to bribery as a result of financial difficulties. Certain jobs may not be available to you if you have a bad credit score.
Loan and Credit Card Limits Increased
If you have a decent credit rating, you’ll be able to get larger loans, such as loans required to get a mortgage in some high-cost-of-living areas. You can potentially be eligible for higher credit card limits.
Improved Credit Card Benefits
A higher credit score opens up a wider range of credit cards with better benefits, in addition to a higher credit limit. Many of the highest rewards cards demand good credit.
This includes travel rewards cards that may be used to pay for your entire vacation, as well as cash-back rewards cards that give you a percentage back on your purchases.
Approval for Rental Properties Is Easier
Even if you never intend to purchase a home, you will require a strong credit score. Many people are unaware that even landlords take the credit score in to account when evaluating the tenancy application form.
If you have a strong credit score, you’re more likely to get approved as a tenant since a landlord prefers someone with a history of timely payments versus someone with many loan defaults.
If you don’t, you might have to pay a significant deposit, sign a short-term lease, or even get turned down for accommodation.
Even if your credit ratings aren’t that favorable, you can still get your loan approved. At Commercial Private Equity, we can help you out.
Contact us for more information.